Hagerty, Inc.

Greetings and welcome to the Hagerty First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jake Hovel. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining us to discuss Hagerty's results for the first quarter of 2023. I'm joined this morning by McKeel Hagerty, Chief Executive Officer, and Patrick McClimat, Chief Financial Officer. During this morning's conference call, we will refer to an accompanying presentation that is available on Hagerty's Investor Relations section of the company's corporate website at investor.hagerty.com. Our earnings release, accompanying slides, and letter to stockholders covering this period are also posted on the IR website. Our 8K filing is also available there, along with our earnings press release and other materials. Today's discussion contains forward-looking statements and non-GAAP financial metrics, as described further on slide two of the earnings presentation. Forward-looking statements, including statements about our expected future business and financial performance, are not promises or guarantees of future performance. They are subject to a variety of risks and uncertainties that could cause the actual results to differ materially from our expectations. For a discussion of material risks and important factors that could affect our actual results, please refer to those contained in our filings with the SEC, which are also available on our investor relations website and at SEC.gov. The appendix of the presentation also contains reconciliations of our non-GAAP metrics to the most directly comparable GAAP measures that are further supplemented by this morning's 8K filing. And with that, I'll turn the call over to McKeel, our founder and CEO.

Thanks, Jay, and good morning, everyone. We appreciate you taking the time to join our first quarter 2023 earnings call. Over the last six months, we have been working diligently to re-engineer our business processes with the goal of delivering high rates of bottom line growth fueled by the combination of sustained top line momentum and significantly improved margins. Patrick will cover the steps we have taken in more detail, but I couldn't be prouder of the Hagerty team and what we have accomplished over the first three months of 2023. Slide three of our investor deck shares some of the key first quarter highlights, including Total revenue gains of 30% in the quarter, powered by written premium growth of 18%. We anticipated a strong start to the year, and while the first quarter is our seasonally smallest, contributing roughly 20% of a full year revenue, we are encouraged by the solid consumer interest in Hagerty's suite of products. In our risk-taking entity, Hagerty Reinsurance, premiums jumped 32% due to the growth in written premium and our increased level of quota share to 80%. We have continued to assume more of the risk and premium associated with our strong and stable underwriting capabilities. Membership, marketplace, and other revenue jumps 63% fueled by 22% membership growth, $7 million of marketplace revenue seen on slide four, and a 32% increase in other revenue, including sponsorships. And our team continues to make steady progress with the State Farm integration shown on slide five. on both the technology side and the people side as the teams prepare to begin writing new policies under the 10-year agreement later in 2023. In short, we have a powerful growth story and our top-line momentum has continued into 2023. Now, over the last two calls, we have talked at length about our heightened focus on managing expenses in an uncertain economic environment. This cost discipline will help us deliver the profitability necessary to invest in our future growth ambitions, saving driving and fueling car culture for future generations. These efforts resulted in a significant inflection in our profit trajectory during the first quarter as we delivered positive adjusted EBITDA of $7 million, a $13 million improvement over the prior year period's $6 million loss. We also announced an organizational restructuring in early April that should drive additional cost savings over the coming quarters. In short, our team is executing well on our profitable growth ambitions, and we are well positioned to deliver on our 2023 key initiatives shown on slide six, including, first, delivering high rates of revenue growth powered by sustained double-digit written premium gains and incremental revenue from membership and marketplace. We are reconfirming total revenue growth of 22 to 26% for the year. Second, continuing our evolution into a vertically integrated insurance business. And third, significantly improving the profitability of our business through cost containment and operational efficiencies. We believe we are well on track to deliver the upgraded profit outlook for 2023 adjusted EBITDA of 55 to $75 million. Our teams have mobilized around this short list of priorities, and we feel confident about the pivot to profitability that we have begun to deliver in 2023. Let me now turn the call over to Patrick to cover the financials in more detail.